Conscious Choice: Trading Away the World: The WTO and the Environment

November 1999 | News of the Earth

Trading Away the World: The WTO and the Environment

by Dave Aftandilian

From November 30 through December 3, the World Trade Organization (WTO) will hold its ministerial conference in Seattle. In addition to the 3,000 official delegates and other invited guests, tens of thousands of activists are expected to organize massive nonviolent street protests, teach-ins, and other events at the meetings. Activists have vowed to shut down the WTO on November 30, and groups across the country and around the world plan to organize events on that day as well to highlight the pitfalls of globalization.

Why all the fuss? More than 130 nations belong to the WTO; together, they account for over 90 percent of world trade. According to its official web site, the WTO "is the only international agency overseeing the rules of international trade. Its purpose is to help trade flow smoothly, in a system based on rules, to settle trade disputes between governments, and to organize trade negotiations."

On the bright side, increased trade in the global marketplace can raise the standard of living and bolster the economies of the countries involved, as well as strengthening environmental, labor, and human rights protections. Or so those who favor globalization would have us believe.

But as we have learned from the actual workings of the WTO and the North American Free Trade Agreement (NAFTA) over the past several years, this often has not happened. Instead, we have witnessed more of a "race to the bottom," in which the reckless pursuit of increased exports and cheaper imports has resulted in the watering down of some of our most important environmental and public safety protections. As the Sierra Club put it in their comments on the WTO to the U.S. Trade Representative this past May:

"By promoting economic growth without adequate environmental safeguards, trade increases the overall scale and pace of resource consumption; promotes adoption of high-consumption, high-polluting lifestyles; and prompts countries to seek international advantage by weakening, not raising, environmental protections."

History of the WTO

The WTO was born in 1995 out of the General Agreement on Tariffs and Trade (GATT). GATT, in turn, was enacted in 1948 to help restore the economies of countries devastated by World War Two (and to help prevent another similar global conflict by increasing friendly interaction among nations).

As both a legislative and judicial body, the WTO negotiates international trade laws and also enforces them. In theory, the WTO operates by consensus, with each member getting one vote. In practice, though, "developed countries, especially the so-called QUAD countries (U.S., Canada, Japan and the European Union), repeatedly have made key decisions in closed meetings, excluding other WTO nations" (from Public Citizen et. al.’s A Citizen’s Guide to the World Trade Organization).

The enforcement mechanism of the WTO is the Dispute Settlement Understanding. Under these rules, any member nation may charge another with a violation of WTO trade agreements. According to Keith Rockwell, Director of Information and Media Relations for the WTO, 175 cases have been brought to the WTO so far, 30 of which were settled "out of court."

If a settlement cannot be reached, a three-member panel of trade experts hears the case. The panel’s deliberations are held in secret, and are binding not just on the national governments involved, but also on state and local governments. Although the panel’s interpretation may be appealed, its ruling on the facts of a case may only be overturned by a consensus vote of the entire WTO membership — a practical impossibility, since such a vote would have to include the country that brought the charge in the first place.

If a nation loses a case, it must either agree to adapt its laws and practices to the ruling, or pay compensation. These penalties are often extremely severe — for instance, when the U.S. won its suit against the European Union (EU) in a beef hormone case (see below), it won the right to levy 100-percent tariffs against $120 million worth of Roquefort cheese and other products. (This is why French farmers, worried that the trade sanctions may force them out of business, have been dumping manure on McDonald’s restaurants.)

Trade Trumps Environment and Human Rights

As the EarthJustice Legal Defense Fund and the Northwest Ecosystem Alliance put it, "the WTO has a perfect anti-environmental record. Every environmental law challenged before the WTO has been found to be an unfair trade barrier" (from Our Forests at Risk).

In one of the first cases heard by the WTO, Venezuela challenged a U.S. Clean Air Act regulation intended to reduce concentrations of air pollutants in gasoline. Venezuela argued that the rule was biased against foreign oil refineries. The WTO sided with Venezuela, and in 1997 the U.S. changed its clean air rules to allow foreign refineries to leave more pollutants in their gasoline — even though the U.S. EPA acknowledged that the change "creates a potential for adverse environmental impact."

U.S. environmental protections were dealt a second blow in 1998, when a WTO appellate court ruled that sea turtle protections in the U.S. Endangered Species Act represented an unfair burden to foreign shrimp fishermen. The U.S. regulations had required that all shrimp sold in the U.S. be caught in a way that did not injure sea turtles. As many as 150,000 sea turtles are caught and killed each year by shrimp trawlers, but installing an inexpensive "trap door" device in their nets can prevent up to 97 percent of turtles from being caught, according to Todd Steiner, Director of the Earth Island Institute’s Sea Turtle Restoration Project. Four Asian nations argued that the law was unfair, and the WTO agreed. The U.S. is currently considering ways to change the law to satisfy the WTO.

Nor has the U.S. always played the role of victim in trade disputes over environmental laws. In fact, developed nations have brought most of the WTO charges so far; the U.S. alone has initiated over 50 cases. We accused the E.U. of erecting unfair trade barriers by banning the sale of beef that had been treated with certain artificial growth hormones. Because the effects of these hormones on humans are unknown, the E.U. wanted to ban them until further studies were done. The WTO ruled this precautionary principle unacceptable. The U.S. has since levied $120 million in trade sanctions against E.U. products.

Finally, the E.U. and Japan have brought a case against Massachusetts over a law it passed in 1996 to discourage government purchases of products made by companies that do business with Myanmar (formerly Burma). Massachusetts passed the law to protest the Myanmar military dictatorship’s blatant disregard for human rights; the legislation was almost identical to laws passed in the 1980s protesting South Africa’s policy of apartheid. According to WTO policies, if the panel rules against Massachusetts, the U.S. government must do all in its power to overturn the law — including taking legal action against the state.

Although the Massachusetts case has not yet been settled, it has already exerted a chilling effect on another state procurement law. In 1998, the U.S. government lobbied hard against a proposed Maryland law that would have banned contracts with firms doing business in Nigeria (whose military dictatorship executed activist Ken Saro-Wiwa for the crime of speaking out against the exploitation of his Ogoni homeland by Shell Oil). The U.S. feared this law might violate WTO rules: "we would like to work with you to ensure that we don’t expose ourselves to a potential WTO challenge," said Deputy Assistant Secretary of State David Marchick. The strong-arm tactics worked; the Maryland State Senate rejected the bill.

Global Free Logging Agreement

As if the current WTO rules were not anti-environmental enough, the U.S. is pushing the passage of a new agreement on liberalization of trade in forest products at the Seattle ministerial conference. The proposed agreement would eliminate tariffs on wood and paper products, making them cheaper and easier to buy. It might also cover non-tariff measures, such as how timber is produced and traded, which have been enacted to safeguard forests.

How is this a bad idea? Let us count the ways:

1. Removing tariffs on wood products will increase logging, and likely the already astronomical rate of deforestation around the world (the National Academy of Sciences estimates that each year, at least 50 million acres of forests are lost — that’s an area the size of England, Wales, and Scotland combined). A study commissioned by the American Forest and Paper Product Association estimates that consumption of forest products would increase by 3 to 4 percent if tariffs were removed. That’s probably why W. Henson Moore, president and CEO of the association, is so bullish on the agreement: "It is critical that the international forest products industry set aside parochial interests and join together to support a WTO trade liberalization agreement in [forest products] this year."

2. A WTO forest products agreement would almost certainly open the door to yet more costly and environmentally devastating invasions by nonnative species. Considered the second most serious threat to biodiversity (after habitat loss), and termed "the dark side of globalization" by Business Week, invasive species cost U.S. forests alone over $4 billion a year, according to a study by David Pimentel of Cornell University. WTO rules make it very difficult to set adequate bans, inspections, and other border controls to block invasive species.

Indeed, the U.S. Animal and Plant Health Inspection Service (APHIS) has already acknowledged that fears over WTO sanctions have affected its rulemaking, saying that it "cannot establish regulations that would contravene other laws and policies associated with trade," such as the WTO and NAFTA. And in 1998, when APHIS instituted emergency restrictions on imports of wood packaging materials from China to try to stem the rising tide of the Asian long-horned beetle invasion, Hong Kong immediately threatened to file suit in the WTO.

3. Government procurement rules and eco-labeling initiatives to promote sustainable forestry practices may also be at risk from a WTO agreement on forest products. Under the proposed WTO Agreement on Government Procurement, which may be discussed at Seattle, the U.S. cannot give foreign products less favorable treatment than it gives domestic products. Although exceptions are supposedly available for restrictions to protect "general environmental quality," these exceptions are rarely, if ever, granted in practice (as we have seen above). Thus, other WTO members could bring a case against the U.S. government — or any state or municipal government — for encouraging the purchase of wood products made from forests that have been certified as managed in a sustainable manner. Furthermore, WTO rules prohibit discrimination against "like products" based on how they were made. Thus, procurement rules mandating the purchase of paper products with a certain recycled content could be challenged in the WTO. Eco-labeling standards, such as the Energy Star program to help consumers identify energy-efficient appliances, could also come under fire from the WTO for similar reasons.

Joe Scott, Conservation Director of the Northwest Ecosystem Alliance, sums up the argument against a forest products agreement in the WTO this way: "Here in the Northwest and across the U.S. we are struggling to save our remaining vestiges of ancient forests, and working to save increasing numbers of endangered fish and wildlife from extinction. It’s extremely discouraging that in the face of this struggle, our own government is pushing an agreement that would discourage sustainable forestry."

Agriculture and the WTO

Bad as an international forest products agreement would be, there are a host of other potential nightmares that deserve attention from the Seattle WTO meeting. One issue that is already on the ministerial agenda is agriculture.

Discussions at Seattle will likely center on further "liberalization" in agricultural trade. Supporters argue that this will decrease food prices at the supermarket, and provide hard-pressed farmers with additional foreign markets for their products.

Yet, according to the EarthJustice Legal Defense Fund and the Western Sustainable Agriculture Working Group, "the combined effect of the WTO agreements, the North American Free Trade Agreement, and domestic policies has helped push [prices farmers receive for their products] to record lows, far below the cost of production.... While prices received by family farmers have been at record lows, we have not seen record low prices at the supermarkets."

Furthermore, with increased global trade in agriculture products, threats to food safety in the U.S. have increased dramatically. In 1998, thirteen people were stricken with typhoid fever in south Florida after consuming a contaminated frozen fruit drink imported from Guatemala. Raspberries grown in Guatemala have carried the waterborne parasite cyclospora to thousands in the U.S. And over three hundred Michigan schoolchildren were sickened with hepatitis A after eating imported Mexican strawberries.

As with forest products, further WTO rules on agriculture would likely force a "downward harmonization" of food safety laws to the lowest international common denominator. As described in the section on forest products above, border inspections are also tightly regulated by the WTO. The combination of increased volume of imports, less stringent food safety laws, and more lenient border inspections could result in a dramatic increase in foodborne diseases and parasites like the ones listed above.

Further WTO rules on agriculture may also increase the worldwide spread of genetically engineered foods, while preventing them from being labeled as such. They would also likely make it more difficult for farmers in developing countries to maintain their rights to save seed and protect their traditional agricultural knowledge from exploitation by the multinational agribusiness firms that are increasingly coming to dominate the global marketplace.

No Turning Back?

The WTO is an international organization accountable only to itself, whose sole purpose is to increase international trade. (An illustration on the WTO’s web site, in an article entitled "10 Benefits of the Trading System," makes this point in very graphic terms. A happy fellow in a sporty convertible smiles down at a glum bicycle rider. The caption reads, "Life with...and without imports.") Negotiations and panel discussions are often held in secret, and if citizen or NGO input is allowed at all, it is usually ignored.

Thus, many have come to view the WTO as "globalization without representation." They want us to take a step back, to review and revise the current WTO rules before writing new ones, and to change the current system to allow citizen input into the process. Can we turn back globalization? Maybe, maybe not, but we can certainly ensure that if it does happen, it does not destroy our health or environment.

Four suggestions (not counting joining the protests in Seattle!): Buy locally produced goods when you can. Write a letter to the U.S. Trade Representative asking her to review and revise the current WTO rules before new ones are written, and to abandon plans for a forest products agreement. Urge your Congressperson to sign onto the bipartisan Miller-Cook letter to the President opposing the forest products agreement. And if you belong to an organization, ask it to sponsor a "fair trade, not free trade" resolution similar to the one available from People for Fair Trade’s web site.

Resources

EarthJustice Legal Defense Fund, 415-627-6700, eajus@earthjustice.org

Office of the U.S. Trade Representative, Ms. Charlene Barshefsky, 600 17th Street, N.W., Washington, DC 20508; 888-473-8787

People for Fair Trade, 877-STOP-WTO (786-7986), info@peopleforfairtrade.org

Public Citizen’s Global Trade Watch, mdolan@citizen.org

Sierra Club’s Responsible Trade Campaign, 202-547-1141, dan.seligman@sierraclub.org

World Trade Organization, enquiries@wto.org

Recommend this page to a friend

Top Ten pages recommended to friends: